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How Can a Bond Mutual Fund Report a Return of Over

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How can a bond mutual fund report a return of over 13% when the coupon rate of the bonds they are holding are just 7% and interest rates are falling?


Definitions:

Competitive Industry

An industry where numerous firms compete against each other to sell similar products to consumers.

Average Total Cost

The total cost of production (fixed and variable costs) divided by the quantity of output produced.

Marginal Revenue

The augmented income obtained by selling one more unit of a good or service.

Marginal Cost

The increase in total cost that arises from producing one additional unit of output.

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